OmniAb, Inc. (OABI) Earnings Call Transcript & Summary

We are right at 8 a.m. Pacific Time, 11:00 a.m. Eastern Time, so we're going to get rolling here. So before I jump in, I just want to take a quick moment and mention that our team today will be making forward-looking statements. Those involve risks. Our business faces risks, our industry faces risks, our world faces risks, and I encourage investors to review our SEC filings for a fulsome discussion of risks. So welcome to what is essentially OmniAb's first Investor and Analyst Day by name. Now we did something similar to this, an R&D Day when we launched our OmniAb's single domain technology a few years ago. But this is the first time -- we've hosted something like this here at our site in Emeryville. I really appreciate that many of you flew out here, long distances or drove across bridges or both to get here. We are really, really proud of our East Bay home here. It's a very efficient place for us to do business, and we're looking forward to kind of sharing our labs and touring the folks that are here in person. So today's agenda, I'm just going to do a quick business overview will cover licensing strategy. Talk a little bit about our transgenic chicken platforms or on new Omnitides platform. And then we'll have a substantive discussion around exploration and then also a taste of how we continue to leverage AI within our business. And then Kurt will do a wrap up at the end of the formal presentation, we'll do a Q&A section. [Operator Instructions] So here are today's presenters. And one thing that I'll just recount for everyone a couple of weeks ago or a little more than that, maybe about a month ago, I was touring an investor our labs. And as we are walking to the elevator here, he said, where this business is really fortunate in that it has both of the critical teams. You used the term teas and I said, what are the Ts? And his comment was team and technology. And I fully agree with that sentiment. We have really an esteemed and decorated team and esteemed and decorated Board of Directors as well. And candidly, it is an honor for me to work with and lead the team that's shown here on this slide. This group has played a really critical role in a variety of ways, each of them in building the foundation for this business and then also now positioning it for growth, right? And the folks on here are company founders and entrepreneurs. They're inventors, they are innovators of technologies that are having important impacts on the industry, not only technologies here at OmniAb, but in prior lives. Their experienced global executives as well. So I'm really pleased to have the opportunity for these folks to present to investors today. Todd, here on the upper row, will present on our licensing strategy. Todd played a really critical role in informing what became the technical and business foundation of OmniAb. We did a string of acquisitions years ago, 6 acquisitions in less than 5 years. Todd played a key role in that and now leads our licensing Bill Harriman was a co-founder of Crystal Bioscience, who we acquired back in 2018. Crystal he was original innovator of the transgenic chicken actually in this building where we're standing today. This is technically, I guess, the birthplace of the transgenic chicken. A couple of floors down in a smaller suite. Bill was the Chief Scientific Officer there. Yas joined us 3 years ago right at the time we were beginning to realize that we had the ability to engineer a variety of novel scaffolds into the transgenic chicken and we're starting to realize how important that could be to the industry prior to joining Yas as Chief Technical Officer at Fair Journey Biologics as well as the scientific co-founder of Cortera, which is an instrumentation company that plays a critical role in discovery. And then prior to that was actually a collaborator around the chicken when she was leading antibody discovery programs at Pfizer. So a long history there with the technology. Brian McGuiness joined us recently, most recently heading Business Development of Bische Therapeutics, which was an early mover in bicyclic compounds. And so more from the therapeutics perspective, but it's great to have Brian on board managing the business development activities associated with our new Omnitides platform. Amechi joined us in July as Chief Operating Officer. Many here have already met Amechi has obviously had a multi-decade success for global career in instrumentation, most recently at Thermo Fisher and then prior to that at Danaher. Bob Chen will present today on how we're leveraging AI. Bob was a cofounder at Exela Biosciences, who we acquired back in 2020. Exela was spun out of the Stanford School of bioengineering. And really, the foundation of that was what became and is exploration. So it's great to have Bob presenting on AI and how we're leveraging that. And then Kurt will finish up today. Many of you -- I think all of you know Kurt, I had a long career at Amgen and like me, has spent a number of years now in the royalty generation space and the technology space, most notably at Halozyme as well. So again, an honor for me to have these folks here presenting for you today and looking forward to updating you on what we've been working on. So this is our mission at OmniAb. It's simple. It's straightforward. I'm actually not going to read it to you, but I -- but what we want to do today is give you a sense of how we do this and then also how we translate that into value creation for our shareholders. That's what we're focused on, and I think we're well positioned to do so. So Slide 7 here is a simple overview of our business. We very intentionally have built a business that is designed to benefit from durable revenue streams, whether that's pharmaceutical royalties or whether that's high-margin proprietary consumables. And it really starts on the left hand of this slide with our proprietary transgenic animals that allow us to create in vivo libraries for both antibodies and peptide discovery as well as our novel screening technologies, not only exploration, which you're going to hear a lot more about today but also our ion channel screening technologies, which position us quite well. We coined this term years ago, BI or Biological Intelligence. We marry that obviously with AI. AI is a natural place for us to be, and we have been for many years. We amass huge amounts of data that don't exist anywhere else. And that data is highly relevant to discovery. So that marrying of BI and AI is really an important differentiating factor of our business. We now have scale. We have a lot of leverageability in this business. We've built this business specifically to have leverageable technologies and now have multiple revenue streams. We have 110 more than 110 active partners, more than 125 active programs over $3 billion in contracted milestones and an average royalty across our portfolio of 3.4%. Exploration is something that we believe is really poised for significant growth and the ability to create multiple revenue streams and Amechi is going to talk more about the market and our analysis and opportunities there. So we wanted to frame what we see as the key pillars of value here at OmniAb. We feel like we're now better positioned than we've ever been to drive value for our stakeholders. Largely because we have these multiple ways to create value. It starts on the left with our pipeline and our partnerships. We've continued to build up a growing pipeline of partners or a growing portfolio of partners, our partner pipeline of programs has continued to grow. And now we're starting to see a ripening of some of the late-stage assets with what our partners are calling pipeline and product opportunities. And I think that's a really important maturation of our pipeline. In the center are our discovery technologies. We continue to leverage our vantage point in the industry to develop new technologies and almost as importantly, new workflows that enable efficient drug discovery. We're seeing an increase in the pace of novel drug discovery of partners going after new novel targets and we think we're unusually and very well positioned to meet those needs. Our exploration platform, as I said, we're very excited about -- a lot of that excitement is informed by robust primary market research that Amechi will talk much more about in his section. So I'm going to kind of step back now, just for a moment, I want to talk about royalties generally. Kurt will talk in his section about the value of aggregating royalties but I'll just say, just as a personal note, I've spent the last 16 years or so of my career in and around pharmaceutical royalty generation. And it's been interesting seeing that area evolve over that 16-year period of time. More and more players are out there, getting involved in royalties, writing checks to get access to royalties. That's not really our model. And for us, it's far more scalable, far more efficient for us to essentially create tools, leverage our vantage point in the industry, to create tools that allow us to generate royalties or generate and grow a portfolio of royalties that way. And so that's the model we've pursued, and I think we're showing kind of the efficiency of that over time. So why are royalties so valuable? Why is there so much interest in royalties? One, they have predictable and recurring cash flows require limited operating expense and limited operating expense risk can provide broad exposure to a growing health care market and you can build up a diverse portfolio. If you have platforms that are broadly applicable to a variety of therapy areas that allows you to create a diverse portfolio of royalties. And then lastly, they often come with strong intellectual property protection in a variety of forms, including, of course, patents but also regulatory exclusivities. There's often proprietary manufacturing or other know-how that can protect novel pharmaceutical products and royalties. So IP, we see as a really important advantage here at OmniAb. As you'd expect, we have a suite of novel technologies that I'll talk about more in a moment, but we have over 350 technology patents on our technologies, many of which will be those technologies we'll be highlighting today. And they cover a variety of factors: our transgenic animals, methods for creating the transgenic animals, our screening technologies various elements of exploration, et cetera. So we've got that broad intellectual property estate that we pursue globally. But importantly, the way our license agreements are structured. And the way that our royalties are protected and linked are to the patents that the partners file on the drug that comes out of our technologies. And what that does is it creates a really diverse intellectual property foundation upon which our royalties are based. It also creates an ever elongating tail of protection. And on the right-hand side of the slide, you can see the patent applications that are filed by our partners for which the primary invention is a compound that has come out of our technologies. And that says a lot about the conviction of our partners around the molecules that they've discovered and their investment there from a global perspective. So here on Slide 11, we have our -- what I call our continuum of technologies. And we think about these in sort of 3 basic buckets: creation of novel libraries that are targeted for the partners' needs or novel screening technologies and then ultimately delivering at the end of the day. We can do downstream work prioritization and selection of candidates for our partners. Many of our partners will do that work in their own labs, which is completely fine, but we can do that work as well. And so on the creation side on the left, it really starts with our source technologies, our core genetic engineering capabilities, our IP and know-how around that. We've built up a multi-species platform of discovery technologies. You'll hear a lot about our transgenic chicken platforms today. Bill will highlight our OmnidAb single domain platform that we launched a few years ago. And yes and Brian will talk a lot more about our Omnitides platform as well. In the center of the slide, here, you see our high-throughput screening technologies. Exploration, which Amechi will talk through -- is it ultra-high throughput single B cell screening platform that allows massive amounts of data generation and screening high-throughput single cell phenotypic screening, which is a big need in the industry. I'll talk a little bit more about our ion channel capabilities as well. That also falls within the screening, but touches other elements of our technology, and that's an area of increasing interest, especially for some of our larger partners or larger, big pharma and global partners. And as I mentioned, we have a suite of delivery work that we can do prioritization of candidates, binding kinetics, epitope binding, those sorts of things. So along the bottom of this slide, you see our Omnideep platform that we launched a few years ago. This is our suite of in silico tools that are really woven throughout our platform. When you're in a position like ours where you're generating large amounts of data that don't exist anywhere else in the literature, leveraging in silico tools and AI to process that data to guide that data selection is a natural place to be in a place we've been for many years. So now I'm going to talk a little bit more, as I mentioned about in channels and their role in health and disease. These ion channels as targets have long been viewed as kind of holy grail targets for almost any modality, almost any way of attacking them, but especially for antibodies. And when you see the areas of biology that ion channels touch and are involved with, you can get a really clear understanding that these are big markets. These are significant unmet needs, and you can understand why there's an interest in our ion channel capabilities. We announced a new deal back in August with [ Eli Lilly ] for an undisclosed ion channel target for an undisclosed modality. And that's a deal with substantial downstream economics that has garnered some attention and also, I think, created more visibility for this element of our technology stack. And we really do believe we've built and developed an industry-leading platform for a channel discovery. So we partner largely with big pharma players who are interested in pursuing these ion channel targets and want access not only to our suite of discovery technologies, but also our custom cell lines, our custom reagents, our ultra-high throughput screening capabilities that are very specific to ion channels. The visual here on the right shows where we have stable lines, in some cases, novel screening assays. And these agreements are generally multiyear agreements. They typically include a much larger license and service fees, including time and pass-through costs in addition to milestones and royalties. So we think this will continue to be an important part of our business and a growing element as we move forward. I'm quickly going to run through some metrics that we report quarterly, these numbers here on the next few slides are as of June 30. We'll give our Q3 number updates as we normally do when we report our Q3 results in a few weeks on October 30. But you can see here our growth in active partners over recent years, net of attrition, you see kind of the categorization of those partners. And really, these deep relationships with our partners provide a unique vantage point on the industry and really inform our investment priorities, our innovation priorities, et cetera. The next slide here shows the breakdown of active programs. Again, nice growth net of attrition. Over 98% of our active programs have contracted future economics to OmniAb. We have over $3 billion in total potential contracted milestones. On the pie chart there in the near center of the slide, you can see how those are broken down between clinical milestones and commercial milestones. So heavily weighted to the clinical side, you also see distribution of our contracted royalty rates and the ranges. So a fairly tight range there. Our average royalty across our portfolio is about 3.4%. Active clinical programs and approved products. This number continues to grow. We continue to expect new clinical entrants this year, you see this broken down also by source technology. The ones there in the Hach in the center pie chart are ones that are derived from our novel chicken technologies you can also see the breakdown of therapy areas of these programs that's becoming more diverse over time. And importantly, these 34 programs have about $340 million of contracted remaining potential milestones to OmniAb. The next slide shows our clinical and commercial partner pipeline. These are 4 programs that have contracted remaining downstream economics to OmniAb. Importantly, this has really started to mature this year. We've seen much more, I'll say, crowding in a good way on the center and right-hand side of this slide as more programs enter into late-stage clinical development. We've got a couple of programs in recent months that jump directly from Phase I into Phase III, the [ romantimig ] program with Johnson & Johnson that's pursuing multiple myeloma and the Merck KG percentage sentican, ADC which is going after a variety of indications that I'll talk about in a moment. You can also see the little chicken icon here, which indicates programs that are derived our transgenic chicken technologies. I mentioned at the outset, kind of the value of our partner program. And we have a select number of late-stage partner programs where the partners are starting to refer to these programs as either pipeline and a product programs or programs with first-in-class or best-in-class potential. Especially important as you think about aggregating royalties, our pipeline in the product programs. These are ones that I pay attention to. One, they have multiple ways to win, multiple ways to create value. Importantly, I'll point out the IMVT-1402 and TEV 408 programs, both of which have had data in recent months and years, both of which have potential in as many or even more potentially as 5 indications. You can see the potential first indications and then the added indications on the far right of the slide. The Merck KGA program is one that jumped directly from Phase I to Phase III earlier this year in recent months, currently pursuing colorectal cancer but has potential in a variety of other areas as well. So you can see the conviction of the partners and the investments that they're making in these programs and we're excited to continue to see the data mature and partners aggressively pursuing regulatory progress with these. This next slide shows partner commitment to programs that are in the clinic. So this -- these are data that we track internally. We don't -- we haven't presented these previously, but I think they're an important sort of viewpoint or provide important insight into how partners are investing in our programs. You can see the number of clinical trial starts on the left-hand side and then also the number of planned or enrolled patients across the portfolio of clinical programs been produced with our technology. And as another measure of the partner's conviction here, we estimate that based on the data that's shown here, these partners have committed or are spending more than $2.4 billion advancing programs for which are ones that are derived out of our technology. So I think it says a lot about the value that we are bringing to our partners and the conviction that they have around these programs. This next slide shows selected partner clinical readouts that are coming in the last part of this year in just the last few months of 2026 and during 2027. These NCT numbers that are referenced here are pulled directly from clinical trials.gov, the placement on this graphic are based on the primary completion dates for the partner programs for these clinical trials. And so a substantial number of readouts over the next 15 months, about 19 clinical trial readouts in that period of time. We see some Phase I data that's coming out in other indications for the Merck KG percent of [ artosentican ] the ADC program I was referring to, but some really exciting programs also in readouts in the middle of next year, the IMVT-1402 readouts, which are potentially pivotal readouts for that program, also the [ remantimig ] readouts as well that are garnering a lot of attention. So we're excited about the flow and the data that's to come as our pipeline matures. And then lastly here, as I kind of wrap up before I hand it over to Todd, I wanted to kind of give a little bit of an overview of our expectations for the business in the short term, in the midterm and in the long term. We spent a lot of time, as I said at the outset, building a business that's designed to benefit from durable revenue streams that is highly leverageable and efficient. And in the next couple of years, we expect our portfolio to continue to mature. We expect to continue to see milestones coming in from late-stage assets. Generally, milestones get larger as a program progresses later in development. We expect to see a potential launch of IMVT-1402 in its first indications and we'll continue to build a foundation for exploration that you'll hear a lot more about in Amechi section. In the midterm, I expect our business will continue to evolve and grow -- we'll continue to diversify our revenue mix with multiple new assets launching. We'll continue to grow our portfolio. We expect we'll see other major new product launches. We get very excited as we look even more deeply into our portfolio, and we'll continue to manage or really leverage, I should say, our vantage point in the industry to inform our technology innovations, our technology investments. And then in the long term, we'll see continued launch of new products, expect the exploration, installed base to expand greatly as we expand our reach and spread more instruments. That ought to produce recurring revenue in the form of high-margin consumables and we'll continue to have a robust and efficient and diversified partnering model. So we really want to continue to leverage this vantage point in the industry that we have and we've created drop water there. and continue to have a controlled expense structure to really demonstrate the efficiencies that we've built in the business and the efficiencies that we've kind of built across our business platform. So that's an overview of how we're seeing the business, and I'm going to turn it over to Todd now to give you a little overview of our licensing strategy and plans to.

Thanks, Matt, and good morning, everybody. Todd Pettingill, Vice President of Business Development. Today, I'm going to talk about our licensing at OmniAb, focus on a couple of different aspects. Number one, how we see the market evolving and two, how we are positioning ourselves to optimally capitalize on those movements and maximize value for our shareholders. So on what the market is doing. We see several positive developments that are combining to become a very strong tailwind for the licensing business. First, just the space we're in. We're in the biologics space. Biologics have historically been known more and more to have a higher probability of success than other types of medicines. So it's a great place to be. Additionally, our -- the industry, generally speaking, it's recently is kind of has come to the realization that there's been a bit of target crowding and there's a need to spread out and investigate new areas. With that, we're positioned well. We have a broad range of technologies that can help people to approach the new targets that they're focused on. Additionally, as they're looking to new targets and looking for new technologies, they're focusing on new types of scaffolds, different types of antibodies, different types of biological structures. And we're fortunate to have a wide range of technologies that are useful for these medicines. Also, it's no secret that more and more the industry is starting to incorporate in silico development into discovery efforts. And we are positioned well to not only provide the data sets or the data that can power these models they're working with, but also generate and screen through data on a high level, quick level, as Bob will be speaking to later on. Finally, the overall biotech market is definitely been in a better position over the last several quarters. It was a little tough sledding for the last several years, but things are definitely opening up and this is putting our partners in a position where they have a stronger sources of capital, enabling them to approach the targets and the drugs that they're seeking to develop. Now looking backwards, OmniAb, we've spent the last several years focused on creating a wide range of partners. And this has put us in a unique position where we can listen to what our partners are saying, we can hear what they're focused on, what they're interested in learning. And while we'll never share that with other people, it does allow us to think about and inform how we focus our internal R&D efforts. We build out the technologies that our partners are interested in. For a recent -- for example, over the last couple of years, we've launched several different technologies. We have our heavy chain only chicken OmniAb. Our ultra-long CDR chicken OmniUltra. And today, we're going to be talking about Omnitides, our peptide discovery platform. For all of these, these are -- have been a result of us working with listening to our partners, figuring out what they're interested in and then adjusting our R&D accordingly. And as you can see, it's been paying off. Over the last several years, a bigger and bigger portion of our partners have been focused on these new technologies. Finally, not only are we innovating in our technologies, we're also innovating in how we structure our deals. So we pride ourselves on going to the market and saying, hey, come to us, we can figure out a structure that works for you, where our goal is to get our technology in the hands of as many people as possible. These are some of the -- or the structures that we're working with, but we're open to a wide range. So I'll go through each of them. First, our standard tech licensing. In this structure, people come to us, they're looking to get access to one or more of our technologies. We'll sign a deal that gives them access and the great thing about how we structure these is we can be pretty agnostic about how we structure them. It's -- we're looking for an NPV risk-adjusted NPV neutral type deal. But with adjusting appropriately for probability success, we can move payments forward to more of an upfront structure or backwards to more of a back-end structure and more or less, we're aiming for the same risk-adjusted NPV. So we have a lot of flexibility in how we structure these deals. But generally speaking, there's always some element of upfront payments, service fee, clinical milestones, royalties. Next, we have our ion channel screening group or screening deals, which are driven by our ion channel screening group. So we're fortunate at OmniAb to have a group that came into the fold through indirectly through an acquisition. Our ion channel screening group, they've been together for many decades, and they're known in the industry as one of the best ion channels going groups out there. And so when new targets come into interest. They're 1 of the first people that the industry participants come to. What that allows us to do is we can get -- well, number one, these deals, they rely a lot more on the service. So there's a lot larger upfront. Additionally, there's bigger back-end milestones and royalties. So these are sources of some of our larger deals. Next, we have the entrepreneur enablement program. So this is pretty similar to our standard tech licensing with the main difference that we can work with people who are capital constrained. We find either new industry participants that have interesting scientific ideas or people have proven themselves and also have interesting ideas. And we can work with them and provide our technology where with other customers were more cash focused on the upfront. With this new -- with this particular program, we can work to -- we can take equity upfront. So this allows us to enable our partners who normally wouldn't be able to get access to our technologies. We can give our technologies to them. Also though we can provide ourselves with additional equity upside as we upon the success of these companies. Finally, we have our asset-based deals. These are -- we have a series of assets that are on ourselves, either through say we've got a proof of concept study or we have an asset for another reason. They're generally more advanced. So when we go to market, we can command a much larger upfront. And there's still some element of milestones and royalties on the back end as we do these deals. So these are some of the deals we work with. But again, I want to emphasize that we're highly focused on coming up with a wide range of deal structures that work for our partners. And again, at the end of the day, we are trying to maximize get our technology into as many people's hands as possible and drive as much steel making in order to drive the overall value of the company. So with that, I'll turn it over to Bill, who's going to be talking about the benefits of working in our transgenic chickens.

Thanks, Todd. So I'm Bill Harriman, Senior VP of Discovery Partnership Management and Technology Development. And I'm going to provide you an overview of the transit chickens we've developed over the past decade or so. But first, let me start with addressing the question of why we're working with chickens in the first place. It might sound a little bit odd if you're familiar with the immunizations being in rodents and more standard animals. But if you think about it a bit more, it actually makes a lot of sense to use chickens. The primary advantage of using chickens is an in vivo host for antibody discovery is really stems from the substantial, really enormous phylogenetic distance between chickens and humans. When you go to an a to raise an antibody to human target, you're reliant on that animal to recognize your target as a foreign protein. Obviously, it puts it back to the same, it's not going to recognize it. So the amount of differences between the human target and the immunized species ortholog makes a big difference. The more different, the more foreign it's going to look. And therefore, the more robust type of immune response you'll see from that animal. So when you look at the numbers in terms of the sequence similarities and structural similar it is, it's really driven by evolution by genetic drift. So what you need to look at relevant numbers are what's the last common ancestor, let's say, for the males. It's about 100 million years ago. That means from that branch point, the mamas sort of broke their -- on their own lineages and evolution that occurred on everything in the genome. The branch point, the last common ancestor between mammals and birds, it's like 300 million years ago. So much more time for genetic drift to occur, meaning that for pretty much any target you look at, you're going to see more differences between the orthologs of human and chicken versus human and any other mail. Okay? So that, in essence, is what we call the chicken advantage. As a host, it's advantageous to use the chicken to make antibodies to human proteins. Okay. Another concept that you might have heard of a little bit, but I'd like to introduce a little more is biological intelligence. This is something we actually trademarked about 5 years ago. And it refers really to leveraging the incredible power of the adaptive immune response. This is something that all vertebrate animals have. We all have some sort of immune response to foreign pathogens or anything new that comes along. And this is comprised of both cellular and genetic elements that work together to be able to address any challenge at a molecular level that comes along. And even for things that the host animal has never seen before immunologically, so this is why animal immunization is still the preferred choice for antibody discovery and has actually produced the vast majority of approved antibody drugs. Now us as genetic engineers, we aim to tap into the system. It's a powerful system and existing nature. It's there. [indiscernible] animals have it. We want to get in there and actually tap into by introducing scaffolds and frameworks that are designed specifically with intent for making therapeutics. And by doing this, we'll increase the efficiency of the therapeutic discovery process. Now chickens are particularly suitable for engineering applications because of their unique genetic architecture. I won't go into the details of that. And then on top of that, chickens have this advantage in terms of immune recognition that I just spoke of. That said, performing genetic engineering and chicken is -- requires a stack of very specialized proprietary knowledge. Some of this, you'll -- if you go in the tours with us later, you'll see a little glimpse of what I'm talking about there. But the fact is that OmniAb is currently the only company that's offering engineered for therapeutics. Okay. So here's an overview of our transgenic chicken platforms. At the top, we have -- I'm going to chicken and Omniclic, these are both designed to generate antibodies with a classical IgG formats. OmniClic is a variant featuring a common light chain design that is geared towards the generation of manufacturing-friendly bispecific antibodies. Our other scaffold designs include Omni dAb and Omni Ultra each of which can generate novel binding domains outside of the classical format. And in case of Omni dab, it's inspired by a class of antibodies found in cameras, which are comprised of a heavy chain without a light chain at all. Heavy chain-only antibodies are the basis of single-domain antibodies, also known as VHH antibodies or antibodies, which feature a small modular binding domain of 12 to 15 or tethered together or to other binding domains to generate multi-specific molecules. As stand-alone molecule, single-domain antibodies are valued for title penetration, stability and solubility. Also, there's no light chain. So the manufacturing process is also more simplified as well. Now our most recently launched pen Chicken is called Omni Ultra, which is inspired by a subclass of now cow antibodies which again have a unique structure. And these feature ultra-long CDR-H3 domains. As you probably know, antibodies have the CDRs in the V and the VL and the CDR-H3 is the most prominent one in all antibodies. But in cawantibodies, it's super prominent. It actually has a length that's 3x to 4x what's found in the normal human antibody, and it comprised of a stock and nob structure, which because it's a unique shape of the antibody, it allows the antibody to interact with targets differently than conventional antibodies, which are typically more of a flat or plantar surface. So this gives potential access of omni ultra antibodies buried epitopes and deep cuts on targets. Even more sustained, we find that often the knob domains themselves, they're petroting out from the base of the antibody is sufficient to confer binding specificity and affinity. And this attribute is exploited by our Omnitides platform, which you'll hear about in a few minutes from my colleague, yes. Collectively, on the [ Abeta]; Chicken platforms offer versatile ways of interacting with the targets based on proven scaffolds found in nature. For each scaffold, they're a vast sequence space of target-specific binding molecules can be generated just through the simple process of immunization. We orchestrate the genetics, but actually, the animals do most of this work. So I want to take a little deeper look into the OmnidAb platform in particular. And this is for the discovery of single-domain antibodies. The traditional approach the tuition in vivo approach is to use wild-type Lamas or camels because these are among the rare animals that actually produce heavy-chain-only antibodies. And in this process, immunization occurs over the course of several months, it's followed by a display-based discovery process. And if successful, the affinity matured camelid antibodies to the target of [indiscernible] be found. However, you're not done yet. A number of further engineering steps are needed before you can make a therapeutic. Starting with humanization. These are my antibodies. The typical process is to graph the CDRs from the LAMA antibody onto a human framework. But one issue is that the human framework humans don't have heavy-chain-only antibodies. We're not involved in nature to have antibodies that express without a light chain. And so some further framework engineering is required on the human antibody in order to make it work and make it an effective molecule as a single domain antibody. And so these engineering steps will often require or caused some loss in the affinity of the original [indiscernible] antibody. You've lost something because you change it. So you got to kind of add the affinity back. So it's additional engineering. My point here is that -- there's multiple engineering steps you need to go through when you're going from a camelid antibody to a potential therapeutic. And these take time, resources, et cetera, et cetera. So in our approach with OmniAb, what we do is we address that engineering need to make a human VH work well as a single domain antibody, that's an engine that you have to do every time. Well, we do it upfront at the genetic level. So by genetically baking in the essential attributes needed for single demand therapeutics, we can over the immune response to Omni dab chickens for the affinity and specificity. This is what they do naturally. This is the in vivo process. And then coming directly out of the OmniAb animal, we have molecules that are much closer to being ready to go for preclinical and clinical development. So overall, the OmnidAb platform provides an efficient strategy that can fit well with an accelerated discovery accelerated discovery and development time line. And as an example of this, by accessing the pre-engineered single-domain human scaffold and OmnidAb chickens, it's possible for our partners to move through preclinical development quite quickly. In this case study example, we were able to immunize a cohort of animals executed exploration screening campaign and deliver Canada antibodies to our partner in around 7 months. Since our candidates required only minimal, if any, engineering, the partner was able to select leads just a few months after that. remarkably fast, allowing a rapid progression into IND-enabling studies. For this program, it was less than 2 years from the start of the immunization to the clinic. I'll leave you now with Yas, who will introduce you to our newest innovation, the Omnitides platform.

Hi, everybody. Pleasure to be here. My name is Yasmina Adiche, and I'm the SVP of Exploratory Research and Advanced Characterization here at OmniAb. I'm really thrilled to tell you about Omnitides today. So we're introducing this new platform, and it extends our reach into a high-value market that is adjacent to the antibody market that we have historically tailored our platforms towards -- and this is really opening up a whole new kind of innovation opportunity and expanding our reach to different partners. So as you've heard in the context of therapeutic antibodies, the immunization of animals is really a well-established kind of clinically proven method, and it has yielded most of the approved antibodies on the market today. And as you've heard, we have a suite of transgenic animals that addresses that market. But here, what we're doing is we're repurposing the immune system. You could consider it Nature's discovery engine to discover peptides. And as I mentioned, this really opens up new possibilities for us. Peptides are -- they've really been reinvigorated in recent years with the explosive use of GLP-1s. And these kind of medicines can really transform diseases in different ways. So we really see peptides in a targeting strategy as being like a really exciting opportunity for us, especially in radio and in peptide conjugates. And this is because of their small size, they're able to penetrate tumors very effectively, and they have tunable clearance and for imaging, that clearance time frame can match the radioactive decay half-lives of radio nucleide, what we've realized is that the therapeutic peptide community is very different from the antibody discovery market. And so we've developed a peptide discovery to synthesis workflow to really address this market and kind of make ourselves kind of more familiar to the peptide community. So that's really the essence of omni side. So here, I wanted to clarify how Omnitide is different and complementary to other ways of generating petites therapeutics. So the main differentiator is really the stage at which optimization is in core. So because Omni tide is powered by the OmniUltra-chicken that Bill was telling you about, peptide libraries have been naturally optimized in vivo. And this is through powerful biological mechanisms, the biological intelligence that we told you about. This is affinity maturation, clonal expansion control selections to really deliver binder clones. This really eliminates or reduces the need for a stream optimize. The second point I want to draw your attention to is the custom nature of the library. So most of the other as the kind of immune campaign. So every single one is a bespoke custom library. The third point is manufacturability. So the peptide evolve on a developable scaffold facilitating their downstream production by chemical synthesis. And this is a critical factor in determining whether a drug is going to be a success. And so let's consider the other methods. So they kind of very broadly fall into 2 buckets. The first is combinatorial chemistry and display. So this is really a brute force method that screens massive libraries very broadly. But oftentimes, the candidates need extensive optimization to bring that affinity and stability to a drug-like level. And then the other approach is kind of really very opposite. It's rational design. So here, you really focus on 1 or 2 candidates and you're really very much guiding guided by structural or other methods, just the very deeply focused optimization of a few things. So this requires a lot of information. So Omnitides is actually compatible with these 2 methods. But it really just gives you that pull a very high-value candidates to begin with. So this really expedites the discovery to lead times. I want to share with you the Omnitides workflow. It's really quite simple because what we do is we start with the OmniUltra-chicken. So this is immunization. And what happens then is that it will produce these antibodies that have this protruding stock nob feature that Bill was telling you about. And really, you can think of this as an antibody that's displaying a peptide that's kind of integrated into the PEP into the antibody structure. We screen the output of an immunization campaign using exploration, and you'll hear more about this from my colleague, Amiche. And so having identified potential binders at the B cell secretion stage, we can then reconfirm these hits by recombinantly making them on an inert scaffold of an antibody and having this protruding peptide attached to it. We can also just make the peptide by chemical synthesis. This is pretty amazing. That this little peptide that was kind of like discovered within the context of an antibody can actually function as an autonomous unit and it contains all the optimization that you would expect from antibodies. We've actually established a stable of peptide vendors that have reliably and reproducibly been able to chemically synthesized peptides coming from this Omnitide workflow. And conveniently, these peptides kind of spring into shape by random oxidation. This is pretty phenomenal because it means that you don't have to engage complex chemistries for orthogonal protection strategies. But the other thing is that because they conform to a common topology, if you wanted to do a directed oxidation, you could because they're not enormously different. And this is quite important because this doesn't compromise the diversity because the target binding regions are contained in the loop areas, whereas the scaffold helps the stability. On the right here, you see a picture of a sensor gram, and you'll see on the tour later in the advanced characterization, how we generate these types of data. But what this is telling us is that this is a very high affinity interaction. This chemically synthesized peptide is able to bind its target and it does so with a very high affinity. And the affinities that we get out without any further optimization are the same pretty much as those that you would get from an optimized other method. So they're already kind of ready to go at an affinity that's biologically relevant. Furthermore, and this is very important, because they're on this developable scaffold that's really kind of locked in there, they're very stable. They have exceptional heat resistance you can free saw them. You can actually incubate them for an hour. You can boil them in very, very strong asset, and they will still retain their shape and their target binding and this is relevant for radio because when you do radio labeling, some of the conditions that you use are high heat and low PH. And then finally, they're very strongly stable in serum. So this is proof that they don't get proteolytically degraded. So the workflow is really tailored to the peptide discovery market. and it's amenable to multiple applications. And I'll now pass you to my colleague, Brian, who will tell you more about that. Thank you.

Thanks, yes. So I'm Brian McGuiness, Senior Director of Business Development, and my primary focus is to look after and partner the new peptide library, which has just run through. So by a number of measures, peptides are a rapidly growing class of therapeutics -- most tangibly, they account for 10% of FDA approvals between 2020 and 2024. And as of 2026, there are around 130 FDA approved peptide and peptide-based therapeutics, and this is driving rapid market growth from an estimated sort of $117 billion in 6 to a predicted potential in the mid -- or in excess of $ 300 billion by the mid-2030s. Fueling that market growth is the reality that peptides are impacting a broad range of high-value, high unmet need therapeutic areas. Now the aim of this chart is just to give you a high-level qualitative relative relative view of the relative size of the relative view either of the size and growth rate of the peptide markets in the top 5 therapeutic areas that are being impacted by peptide approvals. And perhaps not surprisingly, the metabolic disorders through drugs like the various GLP-1 agonists that there are out there, having in excess of 60% market share. However, indications with broad therapeutic application, for therapeutic scope and high unmet need like oncology and various neurological indications are well established and growing rapidly. And as such, they offer a potentially very deep well of opportunities for novel peptide therapeutics -- so what's driving that growth? What's behind that growth? Peptides are an extremely versatile modality with a broad range of potential applications. The stand-alone therapeutic peptides in -- on the top left-hand quadrant of this slide, such as those addressing metabolic disorders are clearly a very important class. But because they combine the beneficial attributes of both small molecules and antibodies, the universe of potential applications for the Omnitype peptides stretches beyond the stand-alone therapeutics. In particular, driven by high unmet need, developments of new modalities and advances in understanding of disease biology. There's a significant interest that's growing rapidly in peptide drug conjugates and peptide-based precision targeting of a range of therapeutic payloads and that's kind of essentially the right-hand side of this slide. So such formats are accessing significant strategic upside by virtue of their ability to enable the development and application of a whole new generation of novel targeted therapeutic agents. So for all the reasons that Bill and as are really, very neatly outlined and underpinned by the biological intelligence at the heart of their derivation. [indiscernible] peptides are highly versatile modular format, perfectly suited for precise target specific delivery of a broad range of therapeutic payloads. Then this opens up a host of partnering opportunities for us both with our existing and entirely new partners looking either solely or additionally for novel peptide a novel peptide format in their pipeline. Now as a result of conversations that we've been having in the space, we believe that the delivery formats. The 3 delivery formats at the top of this diagram are particularly well suited to the benefits of the Omnitide platform and likely to be the most attractive place for us to focus initially for potential partnerships. However, more broadly, we believe that the Omnicom platform ultimately has the potential to address unmet need in applications with an estimated total market for peptide relevant indications valued at around $1 trillion. So with that, I'd like to hand over to my colleague, Amechi to talk about the exploration platform.

Thank you, Brian. Good morning, everyone. My name is Amechi. I'm Amechi Nwachuku, the COO. And I'm pleased to introduce the exploration platform. I'll explain what makes this technology distinctive as well as share why it is that we believe that it can become an important complementary and durable revenue contributor for OmniAb. So I'm excited to share that we are bringing exploration to more researchers. Starting today, we are making it available to all customers. As you may remember, in May of 2025, we launched the Partner Access program. And that gave our 100-plus OmniAb partners access to be able to use and try the exploration platform in their workflows. And their experience over the last year has been really positive. They've given us positive feedback about how this was able to impact the work that they do every day. whether they were in big pharma companies, whether they were at global CROs or small biotech companies. And at the same time, it gave us increased confidence to now offer exploration for broader availability. Starting this month then as a consequence, we're going to be making the instrument, the proprietary consumables, the software and the support available to all customers. And I'm now going to walk you through what the instrument is, explain what it does explain a little bit about the market and also how it is that we intend to build this business. So exploration is a novel platform for B-cell screening. For antibody discovery teams that use the exploration platform, they're going to be able to explore more boldly to do their work without the usual limitations. And that means that they will be able to go from associated samples to the targeted hits over the course of the morning. And as a consequence, over the course of the year, they're going to be able to do more campaigns and reach a candidate sooner -- the Exploration itself is an AI-enabled high-throughput platform with proprietary consumables for finding and selecting B cells that are producing the antibodies of interest. The system is a benchtop instrument. It fits practically into any lab without any complicated infrastructure, it is FluidX free. It runs from a standard power outlet it requires no external plumbing, air or vacuum. And it doesn't require specialists to operate. A key component is the proprietary microcapillary array that has 1.5 million microcapillaries built into it. These allow for individual B cells to be sorted and separated for deep parallel analysis without any microfluidics. The researchers load the B cells and the assay reagents, for example, target cells or report calls or beats into the array in under 5 minutes than 4 exchangeable foresense channels allow several assays to be run on the cells in a single screen. The instrument then scans every capillary using AI-based image analysis and can identify thousands of positive hits in real time. So with the support, the researcher can select the sales of interest in the course of minutes. Once they've selected those, then a precision laser extracts [ Jetley ] the selected life cells into a 96 well recovery plate. That the result then is a meaningfully different workflow. They can screen millions of B cells and get to hundreds or thousands of intact hits in half a day. Work that used to take them weeks or months can be done in the morning or in an afternoon. And so exploration gives discovery teams the freedom to be bolder in their work. It enables them to work and screen outside the usual limitations, and it delivers high throughput in an instrument that's easy to use, robust and routine lab operation. The core application for exploration is a market that's large and attractive. B cell screening, we estimate at more than $500 million annually and growing at double digits. On the left, you can see how we think about this market. We think of it as industry and academia with industry making up approximately 80% of the market. Academia is smaller, but still remains strategically important. So for us, we intend to serve both customer groups. Along the bottom, you see the competitive environment relate -- it includes generalized technologies such as fax or single cell NGS. It also includes specialized technologies like OptiFluidix, Tropolfluid c, nanowire technologies and others. We also see the potential for eventually growth into new applications, including broader antibody repertoire screening, protein repertoire screening, organism screening. While our immediate focus will be on the core application where we believe exploration already competes favorably. So our partner experiences have convinced us -- that exploration competes favorably with the existing methods on the core value drivers of higher throughput, ease of use, robustness and lower cost. And our primary market research provides additional evidence for that. So we commissioned 2 studies from percepta associates, each involving more than 200 respondents across industry and academia. The first one was a quantitative market analysis. It examined the market size and the dynamics, it looked at the competitive landscape and the projected plans of potential customers to acquire new technologies. The second was a conjoint preference analysis. It examined customer needs, tested alternative product configurations, compared those configurations with the existing technologies and measure how customers value the attributes that exploration can bring to bear for them. And these studies led to 3 important findings that make us even more confident in bringing exploration to general availability now. So the first is that the timing is favorable. Almost 2/3 of the market, 63% of respondents project that they will need a new screening platform in the next 3 years. And of those, more than 20% within the next 12 months. More than half, 55% anticipate investing in advanced in vivo screening, which is the core technology that exploration delivers on. So these -- the implication here is that q a meaningful portion of the market that should be open to a new platform just as we are opening exploration for general availability.quarter Secondly, exploration competes favorably against the existing methods on the attributes that drive the purchasing decision. You can think of the attributes generally as grouped into 3 buckets per economics, productivity and operability. Economics accounts for about 45% of the decision process, productivity about 40% and operability for about 15%. On economics, exploration competes favorably whether we're talking about the cost per screen or the cost per hit. On productivity, exploration competes well and has the potential to be best-in-class on sales per screen, time per screen and automation. And on the operability exploration is distinctive in the ease of use. The interpretation is that customers do not have to trade productivity for usability and that exploration offers a compelling mix of anomic productivity and operability. The third big learning is that, that preference translates into the intention to buy. More than 80% of the respondents said that they would definitely or probably purchase the winning exploration concept. In our [indiscernible] analysis. And that result was consistent across industry, across geographies. Because it's one thing for responders to say that they have a preference for a certain brand or for a certain mix. It's another thing for that preference to translate to an intention to buy. And that's why we believe that exploration is ready for broader commercialization. Customers, they see the value of exploration. A meaningful portion of the market expects to purchase new equipment soon, and the product configuration competes favorably against existing alternatives. So turning to the business model. Exploration combines an instrument led customer relationship with Three recurring revenue streams. The instrument is a starting point, each capital sale establishes that customer relationship and expand the installed base that supports the future recurring revenue. From there, the proprietary chips and kids generate high-margin usage-based revenue with every run. And that revenue scales with adoption and as customers run more experiments. Software adds another recurring revenue stream, annual licenses support analysis and data management, they create predictable revenue, and they can expand as we add more workflows and applications to the platform. And then service completes that model, the installation, the training, the preventive maintenance -- these are all things that support instrument uptime and repeat purchases on customer retention. Typically, these would be multiyear service contracts that grow as the installed base grows. And so together, these revenue streams, they can create, we believe, a durable and complementary source of growth for OmniAb. We expect that this year 2026 exploration would deliver between $2 million and $3 million of revenue. And then we expect that, that would double in 2027 and double again in 2028. And when we think about how that could evolve over time on the right-hand side of the chart, we illustrate how the mix between instruments and recurring revenue could evolve as the instrument sales growth, they will likely be the biggest contributor over the next few years. But then the installed base growth and the usage by customers of the platform will then drive the consumables, the software and the service revenue, and that could become a larger part of the mix. And that would add recurring revenue that's a little bit more predictable over time. The implication is that exploration could develop from an instrument led business to a platform with meaningful recurring revenues. And in terms of the margin profile, it would depend on any given period on that mix between the instruments and the recurring revenue. And so we expect that to evolve as the installed base and the recurring revenue streams grow. So we're excited. We're excited to make exploration available to more researchers and to help antibody discovery teams screen more deeply, move more quickly and reach candidates sooner. For those of you here in Emeryville I invite you to see the exploration in action during the tour following the Q&A. And with that, I would like to invite Bob to share how we are enhancing discovery with AI.

Yes. I'm definitely excited to talk about how we're enhancing Discover AI here at Omnium. Now the explosive rise and expansion of AI tools in our industry has really created tailwinds for us. and they benefit our discovery workflows in multiple different levels, and I want to highlight 2 areas of positive impact here today. The first one is to our core discovery engine. And the heart of that is biological intelligence. Building off of what we talked about already about biological intelligence is that we can think about it as a way to generate a large scale of data. The immune system has evolved over millions of years to, one, reactive target and then generate a large space of possible molecules, tens of millions of sequences for each animal. And then deliver a pool of antibodies that are binding tightly and specifically. This is a living system and this living system where if you introduce a new target, a new data set will be generated each time. And another benefit to this living system is that all the sequences that come out have been bedded against a living host. This is a key advantage over purely in silico discovered molecules because on a computer screen, an antibody might look really good. But when it's made and put into a host, it might have issues sticking to a tissue of that's not desired, maybe causing immune response or has some issues in actually just producing it and so our antibodies that come out of biological intelligence have already been pressure tested by nature. We're going to harness these advantages of this large scale of data, this high-quality set of sequences and we feed them into Omnideep, which is our AI tools. These AI tools help us screen and identify these optimized antibodies and find the winning sequences. So in our paradigm, biology generates and then AI selects. And in our mind, this combination is better than each of them by itself. Additionally, each improvement to AI improves our toolkit that we use to mine this repertoire. And so the rise of AI and the increasing pace of the growth of that makes our biologic intelligence, our biology more valuable and not less. So let's see this process in action. At the very top, what we do is we feed in this biologic intelligence into our deep screening and deep sequencing capabilities centered around exploration and the large-scale data collection methods. Now this is data that's not simply scraped from public databases, but this is data from real immune systems reacting to real therapeutic targets and measured in our labs, and they feed into these databases that are built on multiple species. This is a unique advantage here. We have OmniAb, have data from a variety of immune systems that have evolved separately, which gives us unique insights that we can then feed into our design tools and other deep learning models. And then that can then continue to loop back and feed next round of screening and discovery. And so this loop can improve for time. Another way that AI is really impacting us is that AI is impacting the wet lab and the bench level. And we actually see AI not eliminating the lab, but rather transforming how the lab itself works. And we are expanding exploration with new capabilities to align with this vision. And what we are building is now we are building a conversational AI layer for exploration. Our vision is that we want to make conversation and simple national language, the way to control instruments which allows more users to use it. It decreases the amount of training needed to use our instruments. And the goal is that a scientist simply give scientific direction via input an AI layer will then interpret and then direct the workflow and the instrument would automatically screen and recover the cells by itself. We're currently building this software and also the layer to enable exploration to fit into lab and the loop and also build a foundation for future autonomous labs. This is something that we'll announce in depth at the upcoming antibody engineering Therapeutic Conference in December of this year. Now with all of the hype and enthusiasm around AI running various things in labs, we talk about AI running instruments, maybe experiments or labs one truth that is often underappreciated is that free to do this, you need an insurer that actually works. You need an intro that works reliably, you need an instrument that works without someone just hovering over and sending exit all the time. And we believe that exploration is the perfect platform to lead this charge because of its robust engineering architecture. Most lab equipment moved liquids through tubes or pipes called fluidics, and these fluidics inevitably can clog, leak or have bubbles. And this is a big place of failure, and these failures are often hidden both to the instrument and therefore, to AI itself where our technology is built around no fluidics. So this eliminates this key point of failure. It's also built around validated components has been battle-tested in OmniAb as our discovery screening platform for years now, and we know it supports a very low maintenance operation. Additionally, the instrument itself is very fast, as we mentione and that allows us to keep our cell components happy and healthy, which again further reduces variability. So we see exploration as the right technology at the right time as we enter a place in time where the industry is now embracing the value of lab automation and [indiscernible] for large data generation AI-aided discovery. So really, this enthusiasm has for AI has sharpened people's appreciation for something we've been investing in for years, which is large, high-quality built-for-purpose data generated in instruments that you can trust. Now with that, I want to hand off to our CFO, Kurt, for the financials and wrap up.

Thanks, Bob. I think we are trying to avoid a [ Marco Rubio ] incident. And so we had all these waters up here, but our previous presenters seem to just be curate chopping them off the stage, but that's all right. So I'm here to wrap this thing up. We have -- all right, I -- all right. So we're coming up on our fourth anniversary as a public company, and a lot has happened in those 4 years. We've launched 4 new platforms, we have Omni deep, OmnidAb on Ultra. And today, as was telling you about Omnitides. We launched the partner access program for exploration and then Amethi was talking to you today about how we've expanded that program to go to all customers. And during that time, we've also grown the number of partners that have access to our technology and the number of programs that were generated using our technology. And during that entire time, you can see that we've been finding efficiencies in the business and driving operating costs lower, which you see there on the left-hand side. So R&D and G&A costs have been coming down over time. But we've also taken some of those efficiencies and put them back into the business and funded certain opportunities that we think will drive growth and drive future value for the company. I think as we look to the future, one thing that I want to make sure that everybody understands is Matt and I and the entire OmniAb team here is really committed to making investments thoughtfully and prudently in the business in things that we think will make sure that drive value in the future. And just like we've done over the last few years, as you can see on this chart. I also wanted to spend a couple of seconds on kind of the revenue profile of the company because I think this -- the profile in this picture kind of shows you the value of this business model. And so kind of starting at the bottom and building up, we've got service revenue at that baseline of revenue. And that provides a nice base of revenue. And the nice thing about service revenue is our typical service contracts can run anywhere from 3 months to 3 years. And so we actually have more visibility in terms of future revenue on that service line than we do on some of the other line items. Now one of the things that's maybe not so good about the service revenue is it comes with a cost, right? So we have to dedicate resources in terms of the time of our scientists. We have to spend other money in order to provide that service. We make a nice margin on it, but it's not the kind of the same sort of margin that we have on these other lines like milestones royalties. We spent a lot of time, we talk about milestones being highly variable and that's true in any given quarter, the amount of milestone revenue can be highly variable. However, with over 30 things in the clinic, we are starting to generate what I think is significant milestone revenue every year, and I think you've seen that this year. So while individual milestones, yes, they can be variable, but the portfolio that we have right now is actually kicking off, I think, a nice amount of milestone revenue every year. But the real value, I think, in this business is sort of what you see here on the top around royalties. And what I'm trying to show in this picture is the compounding effect that you get when you aggregate royalties. Right? So royalty should grow and you start stacking them on 1 another, and you can really see significant growth from the royalties. And I think that's the real value of this business. I also think, as Matt talked about earlier, the day of sort of realizing these royalties is getting closer and closer every day sort of based on where the partner programs are. Just kind of reiterate the guidance. We're kind of reaffirming our 2026 guidance today, still expect revenue to be in the range of $32 million to $36 million operating expenses in that -- or cash operating expenses in that $51 million to $55 million range. And we should be really close to breakeven this year from a cash flow standpoint. As for 2027, we'll give that guidance like we always do when we report our Q4 earnings. That should be late February or early March. And then maybe just 1 last slide on some upcoming events. So we've got our third quarter earnings call. That should be on October 30. We're going to do that as a pre-market release. And then we will be at 4 different health care conferences in November. So it's going to be a busy November for Matt and I. And then our research teams will be at various scientific conferences. We're doing 4 different conferences in the fourth quarter. where we'll be highlighting some of the technology that you saw here today and highlighting the exploration instrument as well. That concludes our prepared remarks for today. So I'm going to ask Matt and Amechi to come up on stage, and we're going to move directly into Q&A. [Operator Instructions] But maybe we start with someone in the audience here.

Matt Hewitt from Craig-Hallum. So you noted that the pharma and biotech funding environment has improved. -- where do you typically see that first -- Well, first off, maybe are you seeing some of that spending improved, but where do you see it first? Is it with existing programs progressing into the next clinical phase? Is it maybe you're seeing the pipeline for exploration kind of accelerate and maybe you're seeing more sales there? Just walk us through where you would see

Yes, I'll comment, and then I'll invite Amechi to make a comment as well. Yes, Matt, I think it's a mix. I think the first place we see it is in the dialogue with existing partners, right? So those are deep somewhat, I'll say, technically intimate relationships where we understand what targets are going after, and what they're interested in. And that's probably 1 of the first places we see it. Our partner -- existing partners spinning up new programs. I think as Todd and Brian would say, you also see it in inbound from new potential partners, right? That's another place where we'll see it as well. I will just say, stepping back, I think the industry as a whole is in a very healthy place now. we're noticing the big pharma is taking bigger swings going after bigger indications, bigger drugs. I think that's a good thing. We're seeing more and more really innovative things around some of the smaller partners as the funding environment improves for them. So I think it's a bit of a mix, right? So you can kind of see it in a variety of ways. But probably 1 of the first is with those existing partners. I think Amec can provide a little bit of color on the exploration pipeline as well.

Yes. I do believe part of what we saw in the research were roughly 2/3 of customers are thinking they want to invest in a new instrument in the next 3 years is a reflection of the fine that we're seeing in life sciences tools in general. We've also anecdotally seen interest coming from CROs in exploration because their demand for projects is also increasing. And so they're talking to us about, hey, would this enable us to be able to meet that increased demand. So I do think it's being reflected even on the capital equipment side.

Great. Matt, maybe we'll take one. We got a question from Joe Pancini at H.C. Wainright. His question is, what do you view as the key competition for exploration?

So if you recall the chart that I shared, there are some technologies that make up big chunks of the market as they are today. So fax makes a big chunk of the market, single single cell NGS makes up a big chunk of the market. Hybrid one makes up a big chunk of the market. In addition to that, there are some more specialized technologies that are -- when folks think of single B cell screening. They think of those as being, let's call it, the prototypical technologies in our space, whether they are up to fluidics or Nano technologies, et cetera. So the biggest in terms of what portion of customers use them are fax, single cell NGS and hybridoma.

Jillian is from Robin Renca have a few questions. You mentioned the royalties building those up over time. When might you consider monetizing a portion of the royalties with a third-party royalty investor, if that's a possibility? And what we do you need to see in the partner pipeline to make that worthwhile?

Yes. Great question, Julien. I referred in my presentation to the fact that the royalty space over the last plus years has become a lot more crowded. There are more the best in royalties, a lot more folks trying to find exposure to royalties. And one of the things that does is, in my view, it makes assets and royalties like we have even more valuable. We actually get approached frequently by some of those buyers who want to buy a strip of a specific program or would like to buy a royalty. We haven't pursued those deals. We feel like the business is very well capitalized. And we do feel like those royalties are the juice of the future. Those royalties are a lot of -- represent a lot of potential upside. So while those folks do present themselves to us, we haven't pursued those sorts of deals.

Sorry -- it's okay. Can you -- Okay, can you hear me now? I've noticed in most of the presentations that you've given, you mentioned how antibodies have a higher success rate than small molecules like common theme. Have you looked at how your programs stack up against antibodies coming from other discovery platforms? And do you see any difference in how often they advance through trials or reach approval? SPEAKER01

Yes, great question. And we -- generally, when we look at our portfolio as a whole, especially as we look at downstream progressing, we generally use the industry averages. And when you look at our portfolio, and while we have a growing number of programs over 425 programs, it's continued to grow net of attrition, we're still just a slice. There's still a big market out there for us. there's not a lot of, I'll say, good data on the discovery transitions from what our partners tell us, they often come to us for some of our technologies for targets that are quite difficult. And what we hear from our partners collectively is that they're very pleased with what they get out of us. That's why we see a lot of repeat partners. We see a number of partners coming to us when we launch new technologies. So hard to give you an exact answer there, but we think our technologies actually do position us quite well and position our partners really well.

[ Venafi; ] Stock dock Partners. I was just wondering if you're comfortable commenting. It seems to me like you're entering this very potentially lucrative sweet spot where you've got -- you mentioned exploration sales could increase by $8 million to $10 million over the next couple of years with higher-margin consumables, royalties coming on stream as products advance to a greater extent. So if comfortable, could you give us a sense for what your margin structure would look like in, say, 2030 as you cross through breakeven because a lot of this money is going to start dropping to the bottom line. You've done an excellent job controlling expenses. And obviously, the valuation inflection is going to be as you turn towards profitability. What type of margin contribution could we see from the aggregate revenue stream that's coming on over the next 4 years?

Kurt, do you want to take that?